Warren Buffett did not outperform the market for 60 years because he was constantly watching the screen, but because of one word that can change your view of investing forever.

This word is "Value Investing."

The meaning of value investing is to look for a successful business and a strong company, then calculate its fair value based on the profits and cash flows it generates.

Then you catch this company at a moment when its valuation is less than the fair value you previously calculated.

The beautiful thing about this is that it’s not a secret, but rather mathematical formulas that anyone can do themselves if they understand Warren Buffett’s definition of fair value:

Warren Buffett’s Definition of Fair Value
The fair value of a company is the total value of the profits you can earn from the company over its lifetime in the market, then you calculate this value in the present time.

To be able to apply these formulas to any existing business or publicly traded company, you need to understand these terms:
- Current Value vs Future Value
- Discounted Cash Flow
- Terminal Value

This article explains these terms in detail
With practical numerical applications
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